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Pfizer Inc. has made no secret of its intentions to slash thousands of jobs once a planned merger with pharmaceutical competitor Wyeth goes through, but it may be too early to tell how Wyeth's 300-person worldwide legal department will be affected.
What does seem clear is the effect a merger would have on Wyeth's outside counsel.
In 2006, Pfizer went through a dramatic paring down of its outside firms, reducing the number by 80 percent in what it called its P-3 program, or Pfizer Partnering Program. And in 2008, the $48 billion company started giving individual firms all of the legal work in a certain practice area in an effort to capitalize on alternative fee arrangements, paring the list down even further.
Wyeth, on the other hand, still employs hundreds of outside law firms, bucking the trend of corporate law departments that are streamlining outside counsel in an effort to better manage the work and the cost.
One source familiar with the deal said Wyeth is far behind Pfizer in this process and, given that Pfizer is the acquirer, it may pass down some of its methods for managing outside counsel onto Wyeth.
"Outside counsel will be impacted at some point," the source said.
Douglas Petkus, a spokesman for Wyeth, said no decisions have been made as to any reductions in force at Wyeth and it would be premature to discuss any potential change to the company's external relationships.
"While we are excited the proposed transaction will create the world's premier biopharmaceutical company, it is too early to discuss how integration will impact the two companies," Pfizer said in a statement to The Legal Intelligencer. "We will conduct a thorough analysis of our global workforce and ensure that we are best positioned to serve our customers while achieving our competitive cost structure."
WYETH GO-TO FIRMS
Wyeth commonly uses firms like Reed Smith, Covington & Burling, Williams & Connolly and Arnold & Porter on national matters.
Locally, Reed Smith handles much of Wyeth's litigation work, including a number of cases within Philadelphia's Complex Litigation Center involving hormone replacement therapy drugs.
Reed Smith said it couldn't comment for this article.
Other Pennsylvania firms getting some work from Wyeth include Ballard Spahr Andrews & Ingersoll, Woodcock Washburn and Dechert.
Woodcock Washburn policy committee member Joseph Lucci is the firm's relationship partner for Wyeth. The bulk of the firm's current work for the company is in the patent prosecution area and it has done some due diligence work in the past.
Lucci said it is too early to tell how outside firms will be affected by this deal. He said it could go a number of different ways, and he would expect all of Wyeth's outside legal counsel would be contacted at some point down the road.
Lucci agreed that a situation in which a client is being acquired could present an opportunity for a firm to examine its current relationship with the client and tailor its approach. He also said, however, that it might be the case that the firm's approach is the favored one and it can now be presented to a larger client after the merger. He said he couldn't get into specifics as to Woodcock Washburn's arrangement with Wyeth.
Covington & Burling has handled intellectual property and FDA regulatory matters for Wyeth as well as some lobbying needs. Simpson Thacher & Bartlett is representing the company on its acquisition by Pfizer with Cadwalader Wickersham & Taft counseling Pfizer on the deal.
Pfizer Chief Executive Officer Jeffrey Kindler is a former Williams & Connolly partner and previously worked at Wyeth. Williams & Connolly has served as co-counsel for Wyeth in national Fen-Phen litigation and other pharmaceutical litigation.
Arnold & Porter has handled antitrust matters for Wyeth in the past and also served as a national coordinating counsel for the company in Fen-Phen litigation.
DLA Piper is listed in The Legal Intelligencer's sister publication, PaLAW 2008, as representing both Pfizer and Wyeth. While that in and of itself might put the firm in a good position post-acquisition, it also could help that Pfizer's relatively new general counsel is Amy Schulman, a former DLA Piper partner. A call to DLA Piper's Philadelphia office managing partner, James Brogan, wasn't immediately returned.
Sometimes it's not all about whom you know. The source familiar with the deal said Pepper Hamilton gets less Wyeth work than it used to because the firm's chairwoman, Nina Gussack, is the sister-in-law of Wyeth General Counsel Lawrence V. Stein. The source said that relationship is a complicated one under Sarbanes-Oxley rules. Pepper Hamilton executive partner Robert E. Heideck said he couldn't comment on any client matters without the client's permission.
While most any firm on a company's outside counsel list could come up for review when the company is scaling back the number of firms it uses, most of a corporation's "go-to" firms won't face that process until late in the game, if ever.
Daniel J. DiLucchio Jr. of consulting firm Altman Weil said a corporate law department's first step in eliminating outside firms is to look at a list and immediately table those "one-off" firms that were used once, generally because of their geographic locations. DiLucchio recently went through that process with a client and ended up cutting literally hundreds of firms in one step.
The second part of the process generally focuses on examining the firms a company uses regularly and asking why they are used. DiLucchio said it surprises him how few departments actually ask their in-house attorneys to evaluate each firm. He said he recommends they all do this as a way to further tailor the list.
The final step is generally reviewing the types of work done and the cost charged by each of these firms. This often leads to an RFP process, which DiLucchio said could ultimately mean some long-used and well respected firms are competing for work they were typically just given.
PFIZER-WYETH LAW DEPARTMENTS
About 150 of Wyeth's 300-person legal team are lawyers and more than 100 of those are based in the United States. The Madison, N.J.-based company also has local offices in Collegeville and Malvern, Pa., where it employs 5,000 people.
The source familiar with the $68 billion deal said it is too early to tell how the internal law departments will be affected by the acquisition, though he expects to see some impact. Pfizer had already made some significant cuts to its legal department, he said.
The good thing, the source said, is that for a merger of this size, there is "remarkably little overlap."
Wyeth, for example, has vaccine and biopharmaceutical departments that Pfizer doesn't have. It also still has a consumer health care division. Pfizer sold off a similar division in its company not too long ago. All three of those Wyeth divisions have attorneys dedicated to them, the source said.
